Bank of Japan policymakers divided on shock stimulus

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Bank of Japan board members were divided on the central bank's decision to unleash surprise stimulus measures at the end of October, minutes of their meeting have revealed.

Four out of nine policymakers opposed the decision to step up annual government bond purchases from Y50trn to Y80trn. Their concerns included the limited additional impact of further stimulus and the impact of a declining yen on small businesses.

However, the argument for more stimulus ultimately prevailed, with five members voting for the move.

They were led by Governor Haruhiko Kuroda, who has acted as a strong ally for Prime Minister Shinzo Abe's three-pronged 'Abenomics' economic rejuvenation programme.

Factors in favour of action included the need to prevent "a deflationary mindset" as oil prices fell.

"They stated that, to pre-empt manifestation of such risk and to maintain the improving momentum of expectation formation, the Bank should decide additional monetary easing at this time," noted the minutes.

In the event, the Bank of Japan's surprise stimulus sent the Nikkei soaring and caused the yen to plummet. But just two weeks later, data revealed Japan had slid back into recession.

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